CN: CFLP Manufacturing PMI

Wed Nov 29 19:00:00 CST 2017

Consensus Actual Previous
CFLP Mfg PMI 51.6 51.8 51.6

China's CFLP Manufacturing PMI headline index rose from 51.6 in October to 51.8 in November, above the consensus forecast of 51.6. The increase in November follows a sharp fall in October and leaves the index still well below the five-year high of 52.4 recorded in September.

The modest increase in the manufacturing headline index reflects signs of improved output in the sector over the last month, with the survey's production index increasing from a five-month low of 53.4 in October to 54.3 in November. The new orders index rose from 52.9 to 53.6, the new export orders index rose from 50.1 to 50.8, and the survey's measure of business expectations climbed from 57.0, its lowest level since May, to 57.9. The employment index signalled a slightly faster pace of job shedding, dropping from 49.0 to 48.8.

Also released today, the CFLP Non-Manufacturing PMI headline index also advanced from 54.3 in October to 54.8 in November. The Caixin Manufacturing and Services PMI surveys for October will be released in coming days.

China Federation of Logistics and Purchasing (CFLP) Manufacturing Purchasing Managers Index (PMI) is the monthly survey of about 800 purchasing managers that is conducted jointly by CFLP and National Bureau of Statistics (NBS). The questions focus on the health of the manufacturing sector. The numeric result is a diffusion index. A reading above 50 indicates that manufacturing is growing. A reading below 50 indicates contraction.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The CLFP manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices. The survey tends to have a greater impact when it is released prior to the HSBC/Markit manufacturing PMI because the two reports are correlated.